From: Reuters
Published December 10, 2007 08:04 PM

Farm bill could set fivefold boost in biofuels

By Charles Abbott

WASHINGTON (Reuters) - The new U.S. farm law would require use of 36 billion gallons of biofuels by 2022, five times more than this year's output, under an amendment offered on Monday as a fallback in case an energy bill falters.

Senate leaders hope to pass the five-year, $286 billion farm bill by the end of this week. Senators also are expected to vote this week on an energy bill, which also would set a 36 billion-gallon (137 billion-liter) "renewable fuels standard."

New Mexico Republican Pete Domenici said the new RFS would "reinvigorate" the ethanol industry, encourage development of cellulose as a feedstock for ethanol and expand the volume of home-grown U.S. fuels.

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Ethanol production has skyrocketed since enactment of the 2005 energy law, which mandated the use of 7.5 billion gallons (28.5 billion liters) a year of ethanol by 2012. Production is forecast at 6.5 billion gallons this year and more than 9 billion gallons (34 billion liters) in 2008.

The boom in fuel ethanol has been a bonanza for rural America. This year's corn (maize), wheat and soybeans crops are forecast to fetch record prices at the farm gate. Corn currently is the dominant feedstock for fuel ethanol.

Under the language proposed by Domenici, production of corn-based ethanol would be encouraged to grow to 15 billion gallons. A mandate to use "advanced biofuels," such as biodiesel and cellulose-derived ethanol made from switchgrass, wood chips and other farm waste, would begin at 3 billion gallons in 2016 and reach 21 billion gallons in 2022.

Colorado Democrat Ken Salazar and Republicans John Thune of South Dakota and Larry Craig of Idaho joined Domenici in calling for larger use of biofuels. Thune called the Domenici amendment "this marker in the farm bill" and a safeguard for enactment of the 36 billion-gallon target.

"It is clear the energy bill has slowed down," said Domenici, noting White House objections to a House-passed bill.

The Senate hopes to vote this week on a modified energy bill that drops the House proposals to impose taxes on big oil companies and to require eclectic utilities to generate more of their power from renewable sources like solar and wind.

Senators agreed last week to debate no more than 40 amendments. Republicans reached their limit of 20 amendments on Monday. Agriculture Committee chairman Tom Harkin says Democratic amendments would include a proposal by Assistant Majority Leader Dick Durbin to "sunset" the current U.S. food safety system as a step toward a better arrangement.

Two amendments pending on the farm will would revise crop subsidy rules. One would set a "hard" cap of $250,000 a year per farm in crop subsidies. The other would deny payments to "full time" farmers with an adjusted gross income above $750,000 a year and "part-time" growers with an AGI above $250,000 a year.

(Reporting by Charles Abbott; Editing by David Gregorio)

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